Lease for PawSox stadium is where the devil is in the details

Sunday

Jul 2, 2017 at 8:41 PMJul 2, 2017 at 8:41 PM

When the state, city and team sit down together to hammer out that lease, the team will have in its corner Chairman Larry Lucchino, whose decades of expertise building Major League Baseball stadiums spans the nation.

Kate Bramson Journal Staff Writer journalkate

PAWTUCKET, R.I. — Much has been made about legislation introduced last week to pave the way for the Pawtucket Red Sox to build a new baseball stadium in downtown Pawtucket.

But the legislation doesn't hold the key to protecting taxpayers.

That power resides in another document: the lease agreement.

And when the state, city and team sit down together to hammer out that lease, the team will have in its corner Chairman Larry Lucchino, whose decades of expertise building Major League Baseball stadiums spans the nation.

The city and state had better be on their game, because the stakes are high, says Mark Conrad, an associate professor of law and ethics and director of the sports business concentration at Fordham University in New York City.

Conrad, author of the book "The Business of Sports: Off the Field, In the Office, On the News," says now is the time for the state to invest in attorneys and business advisers well-versed in such contract negotiations, even if that means hiring out-of-state experts.

"I would not rely on local officials to deal with this: not to offend anybody, but it's too complex," Conrad told The Providence Journal. "In terms of the content of the lease, there's one question: Who has the leverage?"

Lucchino and his legal experts and baseball executives have crafted such deals before — in the mid-1980s, he led the drive for a new Baltimore Orioles stadium, and by the late 1990s, he was leading the charge to replace Qualcomm Stadium in San Diego. He had left that city for Boston by the time the Padres' Petco Park in San Diego opened in 2004. After he joined the Boston Red Sox ownership team, he worked to renovate the revered Fenway Park.

Lucchino is a 1971 graduate of Yale Law School. Early in his law career, he worked with sports teams alongside his mentor, the famed Washington litigator Edward Bennett Williams. Williams held ownership interests in the Washington Redskins and the Baltimore Orioles, the latter where Lucchino would rise to become president and CEO.

Now, as the state, city and PawSox consider building a new stadium at the Apex department store site at the edge of downtown Pawtucket, state leaders say they don't know who would negotiate the lease on the state's behalf.

They are considering a model like the one governing McCoy Stadium. The city owns the stadium and leases it to the state, which subleases it to the team.

Last Tuesday, Senate Finance Committee Chairman William J. Conley Jr., a Democrat, introduced legislation to be debated during fall finance sessions in the House and Senate. Asked about the lease at a press conference, Conley said the state hadn't begun negotiating it and there was no draft yet. He couldn't say who would negotiate for the state.

"I don't know who the who is yet," Conley said. "I guess who's sitting at the table will be determined when we get that far."

While that prompted a joke from one reporter — "Who's on first?" — the who will be crucial, says Conrad, the scholar.

"The problem is often the lawyers for the teams are going to be very knowledgeable about stadium-lease deals," he said. "It is not always the case that you may have city [and state] lawyers that may have the same level of expertise, because how often do you really negotiate this?"

Pawtucket Mayor Donald Grebien's spokesman, Dylan Zelazo, said Saturday that lease negotiations haven't begun yet in large part because the city doesn't yet control the land and there's still no commitment to build a new stadium.

Although the city has given some thought to who would represent Pawtucket in lease negotiations, including whether it would hire outside consultants, Pawtucket doesn't know "definitively who would negotiate this," Zelazo said.

Conley's legislation specifies that the Pawtucket Redevelopment Agency would issue three series of bonds to raise $71 million to help build a new stadium. It says PawSox owners would also provide $12 million "in upfront equity contributions."

But at just over four pages, the legislation doesn't come close to detailing the many facets of any deal the parties would ultimately strike.

The current lease for McCoy Stadium is 138 pages long.

That 1998 document details what would happen if there were cost overruns during renovations and if the state bonding agency were unable to sell bonds to raise cash for renovations. It even says the city is responsible for repairing or reconstructing McCoy if it's destroyed by fire or other disaster — regardless of whether insurance proceeds are sufficient to pay for that work.

Naysayers of the Pawtucket stadium proposal have questioned whether the PawSox have backed out of their commitment to pay any construction cost overruns, as the legislation doesn't mention it. Gov. Gina Raimondo said in an interview and Commerce Secretary Stefan Pryor said in a letter he submitted with the legislation that the team's commitment remains.

But it's the lease agreement that would hold the devilish details.

As state and city leaders ascertain whether projected revenues would be sufficient to cover bond payments over 30 years, the lease would also define which revenues matter and which revenues will cover which costs, Conrad said.

Plus, many of the "goodies" associated with a stadium would factor into negotiations, he said: "Who gets the money from luxury seating? Who gets the naming rights? ... Who gets the money from parking? That's big."

One more layer: Minor League Baseball's International League, to which the PawSox belong, must approve the lease, according to league President Randy Mobley. That's because if the team fails to make its required payments to the state, the league is responsible for taking over its debt obligations.

"The league would not want to be saddled with an unreasonable lease should the worst occur," Mobley said.